Question

Central West Virginia Energy Company, a West Virginia coal sales company, along with Massy Coal Company, a Virginia corporation, filed a lawsuit in federal district court against Mountain State Carbon and its member companies, one of which, Severstal Wheeling, was located in Wheeling, West Virginia. The plaintiff s alleged that the defendants, all of which were in the steel business, refused to accept shipments of coal in breach of their supply agreement with Central Energy. The defendants filed a motion to dismiss for lack of diversity, claiming that both Severstal and Central Energy had their principal places of business in West Virginia. The district court dismissed the complaint for lack of diversity, citing the fact that Severstal's self-described day-to-day operations such as "purchasing, sales, transportation, engineering, human resources, and accounting/ financial functions are all handled in Wheeling" and noting Severstal's "visibility in and involvement with the Wheeling community." The plaintiff s appealed, arguing that the court misinterpreted Hertz and that the district court failed to consider the importance of the fact that Severstal's officers control the company's policies and high-level decisions from the corporate offices in Dearborn, where seven of the company's eight corporate officers maintain their offices. The plaintiff s also noted that in Severstal's corporate filings with the states of Ohio, Michigan, and West Virginia, the company listed a Dearborn, Michigan, address as its principal place of business. How do you think the court ruled on the appeal? Why?


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  • CreatedOctober 21, 2015
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